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Economic data, earnings lift US stocks

Fed Chair Janet Yellen told a gathering of central bankers in Jackson Hole, Wyoming, that while there has been some improvement in the labour market, the US jobs market still has not fully recovered from the Great Recession. Photo: Reuters

US stocks enjoyed a week of solid gains following a batch of good economic data and mostly strong corporate earnings as concerns about geopolitical hotspots ebbed somewhat.

For the week, the Dow Jones Industrial Average leaped 338.31 points (2.03 per cent) to 17,001.22.

Worries over Ukraine geopolitics returned to markets on Friday, when Russia sent a convoy of trucks into Ukraine without authorisation. The action was condemned by Kiev and drew threats of fresh US sanctions.

But analysts said the market's overall upward bent this week showed worries had receded after violence in Iraq and tit-for-tat sanctions between the West and Russia over Ukraine had earlier triggered fears of economic havoc.

"The probability of either the Iraq situation or the Ukraine-Russia situation turning into something that's massively disruptive for the global economy is pretty small," said Scott Wren, senior equity strategist at Wells Fargo Advisors.

"The upward trend for the market has resumed," said David Levy, portfolio manager at Kenjol Capital Management.

"Unless there is something new that frightens the market, then the bias is higher."

The week's economic data were generally strong.

Highlights include a big pickup in existing-home sales, a jump in housing starts, lower unemployment claims, weak consumer inflation and a strong improvement in the Conference Board's index of leading economic indicators.

Minutes from the Federal Reserve's July monetary policy meeting showed an intensifying debate on how much the labour market has tightened and how that would impact inflation and the timing of the Fed's plan to raise benchmark interest rates.

On Friday, Fed Chair Janet Yellen told a gathering of central bankers in Jackson Hole, Wyoming, that while there has been some improvement in the labour market, the US jobs market still has not fully recovered from the Great Recession.

Analysts said both the minutes and Yellen's speech suggested the US central bank had not accelerated its timeframe for raising benchmark interest rates, currently expected in the second half of 2015.

Earnings from retailers generally left investors pleased.

"People are feeling much better about retail going into the holidays in a few months and that's helping to support better market tone," said Michael James, managing director of equity trading at Wedbush Securities.

Standout reports came from Dow component Home Depot, which beat earnings expectations by a wide margin and raised its 2014 profit forecast, citing strong sales.

Target, which sells low-priced clothing, groceries, housewares and other goods, reported a nearly 62 per cent decline in second-quarter earnings to $US234 million ($A253.18 million).

But some analysts were heartened by the discount chain's commentary that US sales had picked up in the latter part of the quarter.

Other major corporate news stories last week included Bank of America's nearly $US17 billion ($A18.39 billion) settlement with the Justice Department and other authorities to resolve charges it misled investors on mortgage-linked securities.